Degree of operating leverage

Business & Finance
Tutor: None Selected Time limit: 1 Day

The Poseidon Swim Company produces swim trunks. The average selling price for one of their swim trunks is $81.78. The variable cost per unit is $24.19, Poseidon Swim has average fixed costs per year of $7,808.

Determine the degree of operating leverage for the level of production and sales 471 swim trunks.

Oct 3rd, 2015

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Sales (471 x $81.78) $38,518.38
Less: Variable Cost = (471 x $24.19) -$11,393.49
Contribution Margin $27,124.89
Less:Fixed Cost -$7,808.00
EBIT $19,316.89
Degree of Operating Leverage = Contribution margin/EBIT 140.421%
Degree of operating leverage.xlsx

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Oct 3rd, 2015

Thanks again!

Oct 3rd, 2015

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